Your employees are your most valuable asset. If nothing else, the past two years have surely taught us that. How did organizations survive? Was it their inventory, their machinery, their equity? Those resources may have had something to do with staying afloat, but without the employees to sell, manage, and operate those assets, the business landscape would look very different today.
Knowing this, it’s not surprising the Great Resignation is top of mind. In August alone more than 4.3 million workers quit their jobs. That’s nearly 3% of the U.S. workforce leaving their jobs in search of something better – in a single month. There’s no better time to spend a little to tackle turnover, and save a lot in the long run.
Spending a Lot on Turnover
Research conducted by Gallup in 2019 found the cost of replacing an employee ranges from one-half to 2x their annual salary. In an average year – even a good year – voluntary turnover costs U.S. businesses about one trillion dollars.
Now take into account the massive turnover we’ve seen this year, plus the increasing labor shortage industries are facing. Recruiting is no longer business as usual, and the cost of turnover will show that. Organizations looking to stay competitive will need to utilize signing bonuses, agencies, and headhunters to recruit top talent, and it will be pricey.
All of these costs to fill a position that ideally wouldn’t have been vacated in the first place – and there’s still a risk that the new hire you just spent thousands of dollars onboarding will leave, too!
While this may sound bleak, it doesn’t have to be this way. In fact, Gallup also found that 52% of employees who left their role voluntarily said their manager or organization could have done something to prevent them from quitting. This “something” that could reduce your organization’s turnover by half is really quite simple.
Tackle Turnover by Reassessing Employee Value
Reducing turnover may sound daunting – after all, each employee quits for their own specific reasons. Do organizations need to have a unique strategy for each employee at risk of leaving? Luckily, that isn’t the case. Whatever the reason for leaving is – benefits, work-life flexibility, workplace safety, career development, or something else – chances are the overarching theme is the same: how valued an employee feels.
I’ll say it again: your employees are your greatest, most valuable assets, yet based on 2021’s turnover rates, it doesn’t appear organizations are treating them as such. Now more than ever organizations must lift, connect, and engage their humans before it’s too late. Employee recognition does just that.
A robust employee recognition program allows employees to be recognized and to recognize each other for the invaluable work they do each day. It builds a community grounded in an organization’s core values, strengthening the bottom line. When employees feel seen, appreciated, and connected to their colleagues and organization, they stay longer.
Spend a Little, Save a Lot
How much does your company spend on turnover in a year? How much will your company spend on turnover this year, when resignation rates are at an all-time high? Even without knowing the exact number, it’s probably too much.
Instead, consider putting a fraction of that cost, say 1% of your payroll, into building a robust, collaborative, values-based employee recognition program and watch the ROI flood in. Workhuman® research has proven recognition works again and again.
Across industries, employees who give and receive recognition are 2.6x less likely to leave their position. Employees recognized 7 to 10 times annually (that’s less than one recognition moment a month) see 2x lower turnover than those who go unrecognized. New hires recognized in the first year leave the organization 3x less than their unrecognized counterparts.
The Impact of Recognition
Investing in a recognition program not only reduces turnover and increases engagement, but it also leads to happier customers. A Gallup report found engaged employees are not only more productive but also report 10% higher customer satisfaction metrics than disengaged employees. Workhuman’s data backs this up. Employees who are recognized monthly with monetary value are 4x as likely to receive compliments and be recognized by customers for exceptional service. Even further, the data shows a strong recognition culture yields customers who actually spend more.
The power of recognition impacts organizations in all industries, not just customer facing ones. A Workhuman study found that five manufacturing plants with the strongest recognition culture reported 82% lower recordable injuries than the plants with the lowest recognition reach. Strong recognition cultures also reported an average lost time incident rate that is 65% lower than plants with low levels of recognition.
The impact goes far beyond the individual recipient. Just seeing coworkers receive awards for safety-related moments encourages others to prioritize safety as well. Employees who feel safe in their environment and are appreciated for following safety protocols are more productive. It almost makes them and feel more valued and connected to their work.
There is no avoiding the inevitable, and employers now have a choice to make. The choice is simple. Do nothing and continue to fund the endless turnover cycle, or build a culture where the turnover cycle can’t persist. Strategic employee recognition increases the bottom line through engagement and connection. Spending a little will transform your organization into one where employees want to stay. What are you waiting for?